Affordable Care Act is not a proven "job killer"

Summary:The ACA has elicited strong feelings from proponents and critics alike, but neither side is totally correct when they discuss its impact on jobs. Lawmakers are now having a greater negative effect.

Claims that the 2010 Affordable Care Act is "killing jobs" are unsupported by evidence

The Affordable Care Act was the topic de jour in the U.S. when healthcare exchanges opened up for registrations on Tuesday. The law has elicited strong feelings from proponents and critics alike, but neither side is totally correct when they discuss its impact on jobs. Lawmakers are having a greater negative effect.

The New York Times's Annie Lowrey and John Hardwood asked some health policy experts about the law's impact. Republicans Senators Mitch McConnell and Ted Cruz have said that the ACA is killing jobs and driving companies to make more workers part timers. Those assertions are not supported by data, said Mark Zandi of Moody's Analytics. Bush administration economist Dr. Gregory Mankiw also said that the law has had a negligible effect on the economy.

Most jobs created after the law passed are full time, despite oft-repeated disproven claims to the contrary. That does not mean that it could not change the job market in some fundamental ways.

Mankiw and Zandi said that the ACA could have an "enormous and varied" influence on the labor market with changes to job mobility, job switching, and entrepreneurship rates. Hours may be reduced for some employees, but others may instead be enabled to pursue career changes or start-ups because there's less risk of being uninsured. The law is expected to increase hiring in healthcare related professions as well.

Unclear and unfolding

There have been some reports that businesses are reducing employee hours, and some have even shifted part timers from corporate plans to the ACA's exchanges. However, Disney announced this week that it was making some part-time employees full time. History tells us that employer-supported coverage increased and there was no significant decrease in hiring in Massachusetts after Republican Presidential candidate Mitt Romney enacted a very similar law.

"The current data do not show the health law affecting job growth, wage growth or the proportion of part-timers in the labor force," The Times wrote. It concluded that it's simply too soon to tell, because portions of the law are not in force such as Medicaid expansions in roughly half the states, subsidized insurance exchanges, and the mandate on some employers to provide insurance coverage.

"Both sides are being hyperbolic - Democrats on the effects on health costs and Republicans on the effects on jobs," said Dr. Mankiw. "The data are not really there to reach any firm conclusions." Any assertion that the health law is destroying jobs is "a hypothesis" that doesn't accurately reflect what will happen, he explained.

A politically manufactured jobs crisis

Arguments that the ACA was a "job killer" prompted Republicans in Congress to attempt nullification - an extreme aberration from the normal legislative process. The law was passed by Congress, signed by the President, and survived both a judicial review by the high Court as well as a Presidential election where the opponent campaigned on repeal. An attempt by Congressional Republicans to nullify the law by defunding it was a major contributor to the U.S. government shut down that began on Tuesday.

Unlike the ACA, the shut down and possibility that the U.S. could default on its sovereign debt are known to slow down the economy and hiring. The shutdown is costing around US$300 million per day in lost output and is even driving concerns about whether vital services like Amtrak will be able to operate for much longer. The U.S. Chamber of Commerce, which opposed the ACA, and a band of Wall St. CEOS were against the shutdown and fear a default on debt. The Chamber is giving financial support to Republicans who break with the party.

A default would destabilize the global financial system and have acute consequences for the U.S. economy. The actual job killer, for now, is the political posturing in the House and Senate.